Customer 2 3 4 Gross sales $40,000 $20,000 $110,000 $95,000 Sales returns: Number of items 96 24 64 32 Amount $ 8,000 $ 3,000 S 7,700 $ 9,000 Number of orders: Regular 30 140 55 100 Rush 46 12 45 Cost-Driver Rate Activity Regular order processing Rush order processing Returned items processing Catalogs and customer support $30 per regular order $150 per rush order $15 per item $1,200 per customer Customers pay the transportation costs. The cost of goods sold averages 75% of sales. Determine the contribution to profit from each customer last year. Comment on your solution. Required
Customer 2 3 4 Gross sales $40,000 $20,000 $110,000 $95,000 Sales returns: Number of items 96 24 64 32 Amount $ 8,000 $ 3,000 S 7,700 $ 9,000 Number of orders: Regular 30 140 55 100 Rush 46 12 45 Cost-Driver Rate Activity Regular order processing Rush order processing Returned items processing Catalogs and customer support $30 per regular order $150 per rush order $15 per item $1,200 per customer Customers pay the transportation costs. The cost of goods sold averages 75% of sales. Determine the contribution to profit from each customer last year. Comment on your solution. Required
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
ABC, wholesale, customer protability. Veritek Wholesalers operates at capacity and sells furniture items to four department-store chains (customers). Mr. Veritek commented, “We apply ABC to determine product-line protability. The same ideas apply to customer protability, and we should nd out our customer protability as well.” Veritek Wholesalers sends catalogs to corporate purchasing departments on a monthly basis. The customers are entitled to return unsold merchandise within a six-month period from the purchase date and receive a full purchase price refund. The following data were collected from last year’s operations:
Transcribed Image Text:Customer
2
3
4
Gross sales
$40,000
$20,000
$110,000
$95,000
Sales returns:
Number of items
96
24
64
32
Amount
$ 8,000
$ 3,000
S 7,700
$ 9,000
Number of orders:
Regular
30
140
55
100
Rush
46
12
45
Transcribed Image Text:Cost-Driver Rate
Activity
Regular order processing
Rush order processing
Returned items processing
Catalogs and customer support
$30 per regular order
$150 per rush order
$15 per item
$1,200 per customer
Customers pay the transportation costs. The cost of goods sold averages 75% of sales.
Determine the contribution to profit from each customer last year. Comment on your solution.
Required
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